Realty, PSU Bank index hit 52-wk lows; Canara Bk, Godrej Properties down 3%

In the past one-month, the Nifty Realty and Nifty PSU Bank indices have underperformed the market by falling 14% and 8.7%, respectively, as compared to 1.6% fall in the Nifty 50

Shares of real estate and banking companies (mainly public sector banks (PSBs)) are under pressure. The Nifty Realty and Nifty PSU Bank indices have hit their respective 52-week lows on the National Stock Exchange (NSE) in Monday’s intra-day trade on a sharp sell-off in equities driven by the relentless selling by foreign institutional investors (FII). Thus far in CY25, FIIs have net sold nearly Rs 1 trillion in Indian equities, according to NSDL data.

 

The Nifty Realty index (down 3 per cent at 806.05) and the Nifty PSU Bank index (down 2 per cent at 5748.70) have hit their respective 52-week lows in intra-day trade. At 12:05 pm; the Realty and PSU Bank index were down over 1 per cent each, as compared to the 0.32 per cent decline in the Nifty 50.

 

 

In the past one month, the Nifty Realty and the Nifty PSU Bank indices have underperformed the market by falling 14 per cent and 8.7 per cent, respectively. In comparison, the Nifty 50 was down 1.6 per cent during the same period.

 

State Bank of India (SBI), Bank of Baroda, Canara Bank, Indian Overseas Bank, Punjab National Bank and Uco Bank, from among the PSB pack; and DLF, Godrej Properties, Raymond and Mahindra Lifespace Developers from the realty pack have also hit their respective 52-week lows, NSE data shows. These stocks were down by up to 4 per cent in intra-day trade today.

 

Meanwhile, thus far in the calendar year 2025 (CY25), the Nifty Realty (down 21 per cent) and the Nifty PSU Bank (down 12 per cent) indices have slipped over 10 per cent, as against the 3.9 per cent decline in the Nifty 50 benchmark index.

 

The Indian stock market is underperforming this year, with the Nifty50 delivering negative returns of around 4 per cent vis-a-vis the 4.19 per cent returned by the S&P 500 and the 11.7 per cent return in Europe. The underperformance of the broader market is huge, comparatively, with a 9.6 per cent cut in Midcaps and 22 per cent cut in Smallcaps. 

 

"This is a clear reversion to mean from overvalued territory. The basic reason for this underperformance is the sharp slowdown in corporate earnings this year. Q3 results indicate only around 7 per cent earnings growth. The fact is that a modest single digit earnings growth doesn’t deserve high valuations. This is the basic reason behind the relentless FII selling which has impacted the market. Appreciating dollars aggravated the problem," said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

 

Dr. Vijaykumar added that only indications of an earnings recovery and declining dollar can reverse the weakening market trend. "This may happen soon. India’s macros are strong and a growth and earnings recovery are on the cards. Inflation in the US is likely to rise, thanks to the Trump tariffs, and the Fed is likely to respond hawkishly to that pulling the US markets and dollar down. This will happen, but we don’t know when," he said.

 

Meanwhile, loan slippage for large banks increased quarter-on-quarter (QoQ) but, overall, it remained at a reasonable level. The sequential uptick was due to seasonal agri slippage and increased stress formation in unsecured segments (i.e. personal loans, credit cards and microfinance). Credit costs (at large banks) were broadly contained QoQ, helped by healthy recovery/upgrades as well as utilisation of some contingent buffers, said analysts at InCred Equities in a sector update.

 

State-owned banks witnessed margin compression on account of the deposit mix shifting towards term deposits and lower trading gains on excess liquidity (booked under interest income).

 

Overall profitability for the brokerage's coverage universe moderated sequentially (QoQ). This is because of lower non-core income (treasury income/ recovery from written-off) and a moderation in margins. The impact of negative margins on core profitability was partly offset by contained cost growth and healthy core fee income. Credit cost was well managed and was broadly steady sequentially, the brokerage firm said.

 

Meanwhile,  being  a  cyclical  industry,  the real  estate  sector  is  highly  dependent  on  macro-economic factors, which exposes the sales to any downturn in demand, according to analysts.